Buying a Big Name Franchise is Better, Right?

Unless you’ve been living under a rock, it’a given that you’ve heard of companies like McDonald’s, 7-Eleven, Subway, and Ace Hardware. They are terrific businesses with long track records of success. They have hundreds, thousands, even tens of thousands of locations around the world so it makes sense that if you invest in one of these big, well-known brands your chances for success would be pretty good. That all makes perfect sense…and I would agree it’s true. But, here’s the catch—try to invest in one of these franchises today. Sure, it can be done, but you are late to the party. The prime territories are already taken. If you don’t want to relocate to another city you may have to wait until a new neighborhood develops…assuming it’s not already promised to one of the current franchisees who came before you and has clout in the system. It’s also going to cost you more than it did when they were starting out. The more successful a concept becomes, the more they are able to charge to be part of that system.Growth will most likely be limited too. If your desire is to build your empire and expand by owning and operating multiple units, that option will also be limited based on the available territory issue mentioned above.So what are your other options?

Younger franchise systems! Are they riskier? Yep. But can they offer terrific opportunities? Absolutely. There are tons of great concepts out there that have several years with several locations under their belts. They have proven their model works and they are just now ready to roll it out across the nation as a franchise. Prime territories are available in most metro markets. The investment cost is usually lower because they are just starting. They understand that they need to get people on board to grow the business. Multiple unit options might even be offered at a significant discount if you are willing to put a deposit down, and agree to a reasonable development schedule to get the units open. Being an early adopter can get you the opportunity to lock up desirable territory to secure your future growth potential.

If you are seriously exploring franchise ownership, don’t be too quick to rule out newer concepts. McDonald’s and the others all started with one franchisee. Getting in on the ground floor could provide a much more interesting opportunity if you can find the concept that fits you. Keep an open mind—sometimes the reward can absolutely justify the risk.